In a conventional consumer card payment transaction, a cardholder presents a merchant with a portable consumer device such as a credit card or payment card to pay for goods or services. The processing of the transaction involves the merchant, an acquirer, a payment processing network, and a card issuer. The merchant initiates online processing by transmitting an authorization request message that proceeds from the acquirer, through the payment processing network, and to the issuer. The issuer verifies that the card number, transaction amount, and other information are valid and returns an authorization response message for the transaction back to the merchant. As part of such online processing, a variety of fraud prevention measures can by used by issuers to guard against the unauthorized (or wrongly authorized) use of such cards.
Under some situations, offline processing using a portable consumer device such as a payment card is desirable. For example, transit fare processing from payment cards is typically conducted offline, because of transaction speed requirements at transit fare collection devices such as subway turnstiles or bus fareboxes For transit transactions, thirty to forty-five customers (passengers) are processed per minute, so there is insufficient time for the merchant (the transit system) to go online to the issuer for transaction authorization. Such throughput demands will only allow about 300 ms per transaction. Moreover, such transactions typically utilize some form of contactless card for payment that does not require physical contact between the card presented for payment and the transit fare collection device of the transit system.
Various forms of offline card authentication have been proposed to prevent potential counterfeit card attacks and the potential organized fraud in these situations. See, for example, the related applications patent applications entitled “Verification of a Portable Consumer Device in an Offline Environment” to A. Hammad et al. U.S. patent application Ser. No. 11/680,592 filed Feb. 28, 2007; “Fraud Prevention for Transit Fare Collection” to A. Hammad et al. U.S. patent application Ser. No. 11/680,589 filed Feb. 28, 2007; “Authentication of a Data Card Using a Transit Verification Value” by A. Hammad et al. U.S. patent application Ser. No. 11/680,594 filed Feb. 28, 2007; “Bank Issued Contactless Payment Card Used in Transit Fare Collection” to A. Hammad et al. U.S. patent application Ser. No. 11/566,614 filed Dec. 4, 2006; and “Mobile Transit Fare Payment” to A. Hammad et al. U.S. patent application Ser. No. 11/536,296 filed Sep. 28, 2006.
In this discussion, “contactless cards” for payment systems will include contactless “smart” cards and also contactless smart chips. A smart card is generally defined as a pocket-sized card (or other portable consumer device) that is embedded with either a microprocessor and one or more memory chips, or as one or more memory chips with non-programmable logic. The microprocessor-type smart card typically can implement certain data processing functions, such as to add, delete, or otherwise manipulate information stored in a memory location of the smart card. In contrast, the memory-chip-type card (for example, a pre-paid phone card) can only act as a file to hold data that is manipulated by the reading device to perform a predefined operation, such as debiting a charge from a pre-established balance held in the memory or secure memory. Smart cards, unlike magnetic stripe cards (such as conventional credit cards), can implement a variety of functions and contain a variety of types of information on the card. Therefore, in some applications they do not require access to remote databases for the purpose of user authentication or record keeping at the time of a transaction. A smart chip is a semiconductor device that is capable of performing most, if not all, of the functions of a smart card, but may be embedded in another device.
A contactless smart card is a smart card that incorporates a means of communicating with the card reader or terminal without the need for direct contact. Thus, such cards may effectively be “swiped” by passing them close to the card reader or terminal. Such contactless smart cards typically communicate with the card reader or terminal using RF (radio-frequency) technology, wherein proximity to an antenna causes data transfer between the card and the reader or terminal. Contactless smart cards have found uses in banking and other applications, as it may not be necessary to remove them from one's wallet or pocket in order to complete a transaction. Furthermore, because of the growing interest in such smart cards, standards have been developed that govern the operation and interfaces for contactless smart cards, such as the ISO 14443 standard. A variety of financial transactions, such as retail payment and transit fare collection, have adopted the ISO 14443 standard for contactless smart cards.
As noted above, the transit environment is an environment in which offline processing is the usual mode of processing at the point of sale. The transit environment inherently serves a large population of patrons that either do not possess, or cannot acquire, a credit card or payment card from a financial institution. If they did possess such a card that also had contactless payment capability, it could be utilized in the transit environment to pay fares as described in the related applications referenced above. Without a contactless payment card from a participating financial institution, these transit patrons may not be able to take advantage of all fare discounts, loyalty incentives, or features that are enjoyed by other patrons who have a contactless payment card from a financial institution. Also, if patrons are using a variety of fare media types (e.g., an agency-issued fare media and/or cash in addition to bank-issued contactless cards), then the transit agency must service multiple types of media, resulting in a less-efficient or more costly fare collection system.
Prepaid portable consumer devices, such as prepaid cards or debit cards and the like, have been proposed for use in the transit environment. Prepaid cards or debit cards in this context will be understood to mean accounts administered by financial institutions or issuers with associated prepaid funds that are decremented with each use of the card. In general, these cards were created for use in the retail on-line payment environment. For example, some prepaid cards may be “gift” cards with a beginning value or account balance that is decremented with each transaction until the card balance reaches zero, at which time the card can be disposed. These may generally be anonymous cards in the sense that they do not require the cardholder (the bearer of the card) to maintain a bank relationship of any kind to use the card. Other prepaid cards may be associated with accounts that can be “reloaded” so as to increase or restore the account balance to a greater level. These reloadable cards may be reloaded through many mechanisms, such as the “ReadyLink” system provided by Visa USA, Inc., or through a payroll deposit system, or through kiosks at transit stations or various retail locations such as convenience stores, or another system that allows adding value to the account to replenish it with funds to maintain a positive balance.
Such prepaid cards, also referred to as debit cards, can be problematic and to date have not met with widespread approval in the offline environment. Some of the issues associated with prepaid cards relate to the offline nature of the transit fare collection environment (such as discussed in the related patent applications referenced above). Transit fare collection must be conducted offline because of transaction speed and/or connectivity requirements at a transit fare device such as a subway turnstile or bus farebox. There is generally insufficient time to go online to the issuer for transaction approval/decline, and still have time to process thirty to forty-five passengers per minute as required in the transit environment.
Thus, prepaid cards in the offline environment (e.g. transit environment) have all of the problems associated with offline processing of contactless portable consumer devices, including the potential for counterfeiting and the need for stringent “hot list” management to protect for fraud, utilizing strategic hot list management techniques to keep the size of the hot list in check.
In addition to these issues, prepaid cards have one more problem associated with offline processing, such as processing in the transit environment. This problem relates to the unknown balance of the prepaid card account at the time the card is presented for a transaction, such as when presented for a fare purchase in the transit environment. Since the account balance is unknown at the time of card presentation, there is a potential for overdraft and subsequent non-payment by the card issuer if the funds associated with the prepaid card have an insufficient balance or a negative balance.
The unknown balance at the time or presentation is a known problem with prepaid cards, but is made worse in the offline transit fare payment scenario. For example, if the prepaid card were an anonymous gift card that was used to zero account balance and then discarded, it is possible that the discarded prepaid card could still be used in transit until the card number was placed on the hot list of the transit agency. The transit patron with the discarded card would be allowed to enter the transit system without a challenge until such time as the transaction payment was declined by the issuer. Once a payment was declined, the transit agency would place the identification number or card number of the discarded prepaid card on the hot list for subsequent denial of service the next time the discarded prepaid card was presented for use (fare payment). The patron with the discarded prepaid card may obtain one or more days of use from a zero balance (discarded) prepaid card. It is possible that organized fraud may be able to use or sell transit rides using these spent and otherwise discarded prepaid cards dozens if not hundreds of times before the card is placed on the hot list.
Hot lists are necessarily managed in order to keep the size of the list in check. Card numbers cannot remain on the list indefinitely due to memory considerations and the time it takes to look up accounts within the list. Hot list management techniques require removal of card numbers based on time or non-use, and the card number would therefore be removed from the hot list after this period. At that point, the prepaid card would again be available for use in transit because the card number was not on the hot list any longer. This zero-value card could again be used for transit service for one or more days until the card was again placed on the hot list. This process could continue until the card expiration date.
Thus, prepaid cards in the offline environment are subject to issues such as counterfeit containment and hot list management that are associated with offline processing generally. In addition, prepaid cards in the offline environment have the additional issue of unknown or negative balance containment. If such problems with the use of prepaid cards can be solved, the “unbanked” or “underbanked” transit patrons with access to prepaid cards could then enjoy all of the benefits any other transit patron may enjoy through use of a financial payment card. In this discussion, “offline” processing of a transaction refers to a transaction that does not involve communication with an issuer before a user or customer receives the goods or services involved in the transaction.
From the discussion above, it should be apparent that there is a need for transaction processing that can address the issue of unknown balance or negative balance at the time of presentation in an offline transaction processing environment. Embodiments of the present invention satisfy this need.